An unsecured loan is a type of borrowing that does not require the borrower to provide collateral, such as a house or car. This means that the lender cannot claim any specific asset if the borrower fails to repay the loan. Instead, the lender relies on the borrower's creditworthiness and ability to repay the loan based on their income and credit history. Because there is no collateral involved, unsecured loans often come with higher interest rates compared to secured loans. Common examples of unsecured loans include personal loans, credit cards, and student loans. Borrowers should carefully consider their financial situation before taking on this type of debt.